diff --git a/pkt-line.c b/pkt-line.c
index 5943777a172b93..e9061e61a4bca7 100644
--- a/pkt-line.c
+++ b/pkt-line.c
@@ -462,8 +462,32 @@ enum packet_read_status packet_read_with_status(int fd, char **src_buffer,
 	}
 
 	if ((options & PACKET_READ_CHOMP_NEWLINE) &&
-	    len && buffer[len-1] == '\n')
-		len--;
+	    len && buffer[len-1] == '\n') {
+		if (options & PACKET_READ_USE_SIDEBAND) {
+			int band = *buffer & 0xff;
+			switch (band) {
+			case 1:
+				/* Chomp newline for payload */
+				len--;
+				break;
+			case 2:
+			case 3:
+				/*
+				 * Do not chomp newline for progress and error
+				 * message.
+				 */
+				break;
+			default:
+				/*
+				 * Bad sideband, let's leave it to
+				 * demultiplex_sideband() to catch this error.
+				 */
+				break;
+			}
+		} else {
+			len--;
+		}
+	}
 
 	buffer[len] = 0;
 	if (options & PACKET_READ_REDACT_URI_PATH &&
@@ -602,6 +626,9 @@ enum packet_read_status packet_reader_read(struct packet_reader *reader)
 		return reader->status;
 	}
 
+	if (reader->use_sideband)
+		reader->options |= PACKET_READ_USE_SIDEBAND;
+
 	/*
 	 * Consume all progress packets until a primary payload packet is
 	 * received
diff --git a/pkt-line.h b/pkt-line.h
index be1010d34e65de..a7ff2e2f18cf37 100644
--- a/pkt-line.h
+++ b/pkt-line.h
@@ -85,6 +85,7 @@ void packet_fflush(FILE *f);
 #define PACKET_READ_DIE_ON_ERR_PACKET    (1u<<2)
 #define PACKET_READ_GENTLE_ON_READ_ERROR (1u<<3)
 #define PACKET_READ_REDACT_URI_PATH      (1u<<4)
+#define PACKET_READ_USE_SIDEBAND         (1u<<5)
 int packet_read(int fd, char *buffer, unsigned size, int options);
 
 /*
diff --git a/t/t0070-fundamental.sh b/t/t0070-fundamental.sh
index 275edbf6e75442..0d2b7d8d934995 100755
--- a/t/t0070-fundamental.sh
+++ b/t/t0070-fundamental.sh
@@ -97,7 +97,7 @@ test_expect_success 'unpack-sideband: packet_reader_read() consumes sideband, no
 	test_cmp expect-err err
 '
 
-test_expect_failure 'unpack-sideband: packet_reader_read() consumes sideband, chomp payload' '
+test_expect_success 'unpack-sideband: packet_reader_read() consumes sideband, chomp payload' '
 	test_when_finished "rm -f expect-out expect-err" &&
 	test-tool pkt-line send-split-sideband >split-sideband &&
 	test-tool pkt-line unpack-sideband \